Government claims final say on RIL-RNRL dispute
14 Nov 2008
Mumbai: Reliance Industries Ltd (RIL) cannot sell gas to any party at a price less than $4.20 per British thermal units without the government approving the pricing formula, an affidavit filed with the Bombay high court today said.
The sale of gas ''at a price less than $4.20 per MMBTU is not envisaged as per the empowered group of ministers' decision taken in accordance with production sharing contract (between government and RIL)," the affidavit, filed by S Sundaram, undersecretary at the ministry of petroleum and natural gas, stated.
The dispute between Mukesh Ambani-led RIL and Anil Ambani-owned Reliance Natural Resources (RNRL) over gas supply master agreement pertaining to supply of natural gas from RIL's Krishna Godavari reserves to RNRL's power plants at a predetermined price is being heard by a division bench consisting of justices J N Patel and K K Tated.
RIL, too, had taken a stand that it cannot supply gas to RNRL at $2.34 per MMBTU, while RNRL argued that the price was in accordance with the memorandum of understanding between Ambani brothers before the Reliance demerger.
RIL had contended that the gas price was subject to government's approval, which in turn has now been endorsed by the government.
RNRL lawyer Ram Jethmalani sought to cross-examine the petroleum ministry official and the court has asked the offical to remain present on 27 November.
The court will decide on 27 November whether to allow cross-examination.
The government of India has been made a party to the case, and its stand is that it can regulate the contract between RIL and RNRL.
The price of gas is the most contentious issue. RIL's stand is that whatever price
